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Steve Cannon, newly minted CEO of Mercedes-Benz USA, got his leadership skills from his time spent in fatigues. Though you won't find him telling staff to drop and give him 20, he is leading a charge into new tech territory and looking for a few good Gen Y customers to buy into the heritage brand.

Steve Cannon cut his leadership teeth at West Point (where his record for doing 133 pushups in two minutes is still unchallenged), and as a U.S. Army Ranger patrolling the West German border before and during the fall of the Berlin Wall. Now, he’s rallying troops as CEO of Mercedes-Benz USA (MBUSA), a subsidiary of the German Daimler corporation, and leading a charge to position the heritage brand as an affordable, digitally tricked-out alternative for Gen Y buyers.

"We’ve got a story that no other manufacturer can tell," Cannon says, referring to the company’s claim that they built the first automobile 125 years ago. Mercedes also has dibs on being first to use ABS and airbags, among other now-standard safety features. Cannon, who served as MBUSA’s vice president of marketing until he was appointed CEO in January, can tell an impressive tale about the company’s long history of innovation while keeping a steady hand on safety, mostly because he’s helped drive it.

Cannon’s automotive career began in 1991 when he was executive assistant to the CEO of Mercedes-Benz of North America (predecessor to MBUSA). From there he moved to Stuttgart to join the small team that launched the M-Class, the first Mercedes-Benz SUV ever made in, and for, this market.

"Now, as we move through electric and alternative drive trains, and autonomous cars, there is even regulation in Washington that is embracing that innovation. This march forward is never ending."

Cannon will preside over the launch of a new class of vehicle as well as mbrace2, the company’s upgraded in-car digital platform. Cannon says both the car and the technology are designed to appeal to a younger, virtually connected and cost-conscious consumer. The A-Class compact will debut at $30,000—$6,000 less sticker shock than its nearest cousin, the M-Class sedan.

Paying attention to the needs of the Gen Y customer (who may not even be a customer yet) has informed the some of the features in the mbrace2 that will be installed standard in every new Mercedes. To do this, Cannon says MBUSA made a "heavy investment" in social media and he personally taps an online community of advisors to live chat with on quarterly basis. Cannon says mbrace2’s 3G connectivity (for cloud-based upgrades) and apps (social media, keyless entry), for example, came from a simple question: "Why should I pay an extra $3,000 [for GPS] when I have it on my phone?"

Eschewing the touchscreen and placing the display higher on the dash may not be as aesthetically pleasing as some of its luxury competitors’ designs, but Cannon says it’s an effort to protect drivers who can’t disconnect. "We integrate in the most sensible and safest manner possible. If we don’t, they are going to be holding up their phone while driving."

That hasn’t stopped him from putting 20-somethings behind the wheel of the most expensive S-Class vehicles, either. "They’re not the target market, but their perception is going to drive perception of the brand," he observes, "In order to win, you have to know who they are. That means digital, social, and all the things we are doing."

And winning is something that’s top of mind for this executive. Globally, Mercedes-Benz sold 1.26 million vehicles in 2011, finishing neck-and neck with BMW. Though Cannon has said he’s "not going to go crazy chasing the luxury crown," it helps that so far this year to date, MBUSA is up over 17 percent, selling a total of 106,364 new vehicles to customers.

For him, its another chance to use his military background to rally the troops that started right when he was appointed CEO. Cannon says he spent several weeks just going around to the three buildings at MBUSA’s New Jersey headquarters and shaking everyone’s hand. The sheer number of emails he received in gratitude for that personal introduction was "disproportionately positive," he says and distinguished him from his predecessor Ernst Lieb, who "didn’t walk the floor like that."

Cannon leveraged that introduction to do more in-depth reviews of the ranks from each division, starting with top brass and working his way down the heirarchy. "When you are the new guy, you have permission to ask ten thousand questions," he says. The roving SWOT analysis enabled him to see people in action and assess the strength of the team.

"For me, it is about setting the bar high and being a visible example. In the Army, they say when you see something that doesn’t live up to a high standard and you don’t say anything, you set a new standard," he explains. By getting to know how everyone works, Cannon says he’s more able to see who needs "a pat on the back or a kick in the butt."

What emerged after five months in the trenches was, "A robust management alignment that got people not just nodding to the vision, but to have a part in creating it," he says.

Cannon believes this is going to help MBUSA compete in an increasingly tougher luxury market. So by putting customer experience at the top of MBUSA’s priority list —something Cannon says could use improvement— he’s placing himself on the front line to defend Mercedes’ high standard of excellence. "How can you have anything lower for a brand that espouses the best or nothing?"

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